IRS Codes & Marketplace ECNs

Exemptions for avoiding the Obamacare penalty are further classified into special codes (which are A through H) or issued Exemption Certificate Numbers (ECNs).

ACA exemptions applied for directly on your tax return range from the letter A to H. Otherwise, you’ll need an ECN from the Marketplace for exemptions handled there.

Both codes and ECNs are used by the IRS for classifying Obamacare fine exemptions.

The Obamacare Exemptions

The following are Affordable Care Act exemptions for avoiding the penalty including where they can be obtained as well as their corresponding code (needed when filing your return):

If someone can claim you as a dependent on their tax return (there is no code since someone else is responsible for you)

If you aren’t required to file a return because your income is below the filing threshold (no filing requirement and there is no code)

If your income was less than 138% of the federal poverty line; and you lived in state that didn’t expand Medicaid (claimed on your tax return with a code G exemption)

If you were uninsured for less than 3 full months AKA short-term coverage gap(claimed on your tax return with a code B exemption)

If the price of coverage premiums (goes by lowest cost Silver plan) exceeded 8.13% of your annual income (claimed on your tax return with a code A exemption)

Those are the most popular ways to avoid an Obamacare fine, but there are several other exemptions and they are:

If you aren’t legally in the United States (claimed on your tax return with a code C exemption)

If you are a member of a recognized health care sharing ministry (claimed on your tax return with a code D exemption)

If you are a member of a federally-recognized Indian tribe (claimed on your tax return with a code E exemption)

If you are eligible to receive services through an Indian Health Services provider (same as above Indian status)

If you are or were incarcerated. Awaiting disposition of charges doesn’t count (claimed on your tax return with a code F exemption)

If you are or were an expatriate living outside of the US for at least 330 days or a bona fide foreign resident (claimed on your tax return with a code C exemption)

If you are or were a resident of a US territory, which means other than DC or any of the 50 states (same as above expat status)

If a person on your tax return was born or adopted during the tax year. The month it occurred and prior months are relevant (claimed on your tax return with a code H exemption)

If a person on your tax return died during the tax year. The months after the month of death are relevant (claimed on your tax return with a code H exemption)

In some cases, nonresident aliens and members of certain religious sects can also qualify for ACA fine exemptions.

Obamacare Hardship Exemptions

You could still qualify for a penalty exemption if you don’t fit into the above categories. What’s known as a Hardship exemption can excuse you, at least for some months, from having to pay an Obamacare fine.

If you had medical expenses you couldn’t pay that resulted in a substantial debt

If you were ineligible for Medicaid because your state didn’t expand the program

If you filed for bankruptcy protection sometime in the last 6 months

If you had substantial property damage from a fire, flood or other disaster (either man-made or mother-nature)

If you received a shut-off notice from a utility company

If you were evicted, or faced eviction, during the past 6 months

If you were a homeless person sometime during the year

If you were a victim of domestic violence

If you experienced the loss of a family member during the year

If you had unexpected expenses from caring for an disabled, sick or aging family member

If you appealed a decision which later allowed you to enroll in a health insurance plan but were unable to do so while waiting for a determination

All of the above Hardship exemptions must be applied for via the Marketplace by filling out a paper application. They will process it and provide you with an ECN assuming you are approved.

Notes About Hardship Exemptions

Understand that most of these Hardship exemptions will not excuse you for being uninsured for an entire year. HHS often grants exemptions that are limited to the month preceding a hardship, the month of the actual event as well as the month after.

It should also be noted that being unemployed does not, in itself, make you a candidate for an Obamacare exemption.

Special Cases & Obamacare Waivers

You may be in a situation where you don’t actually fit into any of the exemptions but you feel, perhaps, your case doesn’t warrant an unjust Obamacare fine.

Check out some of the special waivers that HHS granted during the first year of ACA implementation. Unfortunately, these waivers may no longer be available.